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Protect Your Mortgage with a Life Insurance Policy

Sun Life Insurance

Jul 20, 2021 5 min read

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Protect your mortgage with a life insurance policy
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    Buying a home can be an overwhelming experience. There are many variables to consider when getting a mortgage. One key factor to consider is how to protect your family from mortgage debt. 

    Life insurance can help you protect your family against mortgage debt if you suddenly pass away. You can get mortgage protection insurance through a life insurance policy. Not sure where to start looking? Read more below on what mortgage protection insurance is, how it’s different from mortgage insurance offered by banks, how life insurance can be used as mortgage protection insurance, and how a Sun Life Financial advisor can help you find the right mortgage protection insurance solution.

    What is Mortgage Protection Insurance?

    Mortgage protection insurance is offered through a life insurance policy and provides your family or beneficiaries a certain amount of money in the event of your death. With an active life insurance policy, your beneficiaries would receive a tax-free amount of money, called a death benefit. Your beneficiaries could use the death benefit to cover a wide range of expenses, including mortgage debt. The amount that your beneficiaries would receive will depend on how much coverage you have on your life insurance policy.

    Mortgage Protection Insurance vs. Mortgage Insurance?

    Mortgage protection insurance offered through a life insurance policy is slightly different from mortgage insurance offered through banks and similar lenders. Life insurance policies provide your beneficiaries with a death benefit if you die, which can be used to cover a large range of expenses and costs.

    Mortgage insurance offered by banks does not provide your beneficiaries with a death benefit. Mortgage insurance is used to pay off the remaining amount owed on your mortgage in the event of your death. This money, however, goes directly to your mortgage provider instead of your beneficiaries.  

    Mortgage insurance can help pay off part of your mortgage debt, but it doesn’t leave any money for your beneficiaries. If you die, your beneficiaries may need to cover other expenses apart from your mortgage, but mortgage insurance doesn’t provide them with this choice. Mortgage protection insurance offered through a life insurance policy can provide your beneficiaries with more flexibility. 

    Here’s a summary of some of the key differences between mortgage protection insurance offered through a life insurance policy and mortgage insurance offered by mortgage providers:

    Life Insurance vs. Mortgage Insurance

    FAQLife InsuranceMortgage Insurance
    Can it help cover your mortgage?YesYes
    FAQ: Can it help cover your mortgage?
    Life Insurance
    Yes
    Mortgage Insurance
    Yes
    Can it help cover other expenses?YesNo
    FAQ: Can it help cover other expenses?
    Life Insurance
    Yes
    Mortgage Insurance
    No
    Do you get to choose who gets the death benefit?YesNo, the bank or mortgage lender gets the money.
    FAQ: Do you get to choose who gets the death benefit?
    Life Insurance
    Yes
    Mortgage Insurance
    No, the bank or mortgage lender gets the money.
    Does your coverage stay the same as you pay off the mortgage?YesNo, your coverage decreases.
    FAQ: Does your coverage stay the same as you pay off the mortgage?
    Life Insurance
    Yes
    Mortgage Insurance
    No, your coverage decreases.
    Is your coverage secured if you move or change mortgage lenders?Yes, because your coverage isn’t tied to your mortgage.No, you may lose coverage and have to reapply.
    FAQ: Is your coverage secured if you move or change mortgage lenders?
    Life Insurance
    Yes, because your coverage isn’t tied to your mortgage.
    Mortgage Insurance
    No, you may lose coverage and have to reapply.

    Why use a life insurance policy to protect your mortgage?

    With a life insurance policy, your beneficiaries have more flexibility to use the death benefit to cover a wider range of costs. They can cover your remaining mortgage payments, but they can also cover other debts and expenses, such as childcare costs and other living expenses. 

    Here are some other key advantages of having a life insurance policy to protect your mortgage:

    • Your coverage amount stays the same as you pay off your mortgage 

    • You can keep your coverage, even if you move from one home to another

    • You can select a beneficiary to inherit the death benefit 

    Who should buy Mortgage Protection insurance?

    If you’re worried that your partner or family will have a difficult time covering your mortgage payments if you die, mortgage protection insurance could be a beneficial option for you. Mortgage protection insurance can provide you with peace of mind, knowing that your family or beneficiaries won’t be struggling with your mortgage debt.

    With mortgage protection insurance, your family should have enough financial protection to help them stay in the home you purchased for years to come. 

    Mortgage protection insurance is especially helpful for young couples who rely on each other’s income to carry the mortgage. Insurance costs are often more affordable for young couples.

    How can I buy Mortgage Protection Insurance?

    Selecting the right mortgage coverage can often feel rushed. If you’re shopping around for a mortgage, your bank or lender may encourage you to buy mortgage insurance directly from them. There may be other options that better suit your needs. A Sun Life Financial advisor can help you determine the right mortgage protection coverage that meets your needs.

    It’s easy to meet with an advisor to discuss your protection needs. You can connect with a Sun Life Financial advisor virtually and securely, and there’s no cost associated with contacting a Sun Life Financial advisor. 

    Have a general idea of what type of mortgage protection insurance coverage you need? You can apply now for Sun Life Go Term Life Insurance. You can get up to $1 million in life insurance coverage, with term lengths of 10 and 20 years available.

    What are the advantages of working with a Sun Life Financial advisor?

    A Sun Life advisor can help you identify which mortgage protection solution is best suited for you, including the right coverage type and the amount to cover your family and beneficiaries.. They can help you compare term life insurance policies with mortgage insurance policies offered by your mortgage provider. There is absolutely no cost to work with a Sun Life Financial advisor. It’s easy to meet with an advisor to discuss mortgage protection and the steps you should take when buying your home. 

    Buying your home might only be one of your many financial goals. A Sun Life Financial advisor can also help you develop a personalized plan to help you reach your other financial goals. Here are some other areas that a Sun Life Financial advisor can help you with:

    • Starting a family: Saving for your child’s education or budgeting to manage new expenses

    • Managing your career: Understanding when to top up your workplace benefits

    • Managing your health: Reviewing your health insurance coverage

    • Planning for retirement: Determining how much you should you contribute to an RRSP

    Sun Life Financial advisors can help you protect the ones you love with a solid financial plan for every stage in your life. Connect with a Sun Life Financial advisor today.

    Sun Life Financial
    Sun Life Insurance
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    Sun Life is a financial services leader in Canada, with 4,000 advisors in more than 1,200 communities across the country. Sun Life offers solutions such as life insurance, health insurance, saving plans, and investment products.

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